a5757825ex10_3.htm


    Exhibit
10.3

    


    SECURED PROMISSORY
NOTE

    


    
       

      
        	$2,500,000	
                May 21,
      2008

              


      

       

    

                                                                                                                   

    THIS
SECURED PROMISSORY NOTE (this “Note”) is made by
Four J’s Development Tools Inc., a Washington corporation (the “Company” or the
“Maker”), in
favor of the order of ANTs software inc., a Delaware corporation (the “Holder”).

     

    Reference
is made to that certain Asset Purchase Agreement, dated as of the date hereof
(the “Purchase
Agreement”), pursuant to which the Holder is selling to the Company
certain assets (the “Purchased Assets”)
for a total consideration of $3,500,000, the obligation of the Company to pay
$2,500,000 of which is evidenced by this Note.  All capitalized terms
used and not otherwise defined in this Note shall have the meanings assigned to
such terms in the Purchase Agreement.

     

    FOR VALUE RECEIVED, the Company
promises to pay to the order of the Holder the principal sum of Two Million Five
Hundred Thousand Dollars ($2,500,000) as set forth below:

     

    (a) $500,000
shall be due and payable on the earlier of (i) the close of the Buyer’s
Financing, or (ii) the date that is six months following the date first set
forth above; and

     

    (b) $2,000,000
shall be due and payable on the earlier of (i) the close of Buyer’s Financing,
or (ii) the date that is twelve months following the date first set forth above
(the “Maturity
Date”).

     

    For
purposes of this Note, the term “Buyer’s Financing”
shall mean the consummation of a transaction or a series of related transactions
in which the Company sells any of its securities for aggregate gross proceeds of
not less than $5,000,000.

     

    If either
day referred to in clauses “(a)” or “(b)” above is not a business day in the
State of California, the payment due on such date shall be made on the next
succeeding business day.  The principal amount and all accrued unpaid
interest (if any) of this Note is payable at the address as designated in
writing by the Holder from time to time.  The Company will pay the
principal and all accrued unpaid interest (if any) of this Note on the Maturity
Date, to the registered Holder of this Note.

     

    This Note
is subject to the following additional provisions:

    


    
      
        
        

      

      
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    1. Security
Agreement.  To secure the prompt payment and performance of all
amounts due under this Note, including principal and interest and costs of
collection, Maker grants Holder a first priority security interest in the
Purchased Assets and all proceeds thereto (the “Collateral”).  Maker
authorizes Holder to file one or more financing statements to perfect Holder’s
security interest in the Collateral.  Upon an Event of Default under
this Note, Holder may exercise all rights and remedies of a secured party under
the Uniform Commercial Code (as the same may from time to time be in effect in
the state of California), which rights and remedies include Holder’s right to:
repossess the Collateral, sell the Collateral in any private or public sale; sue
for a deficiency; take proceeds; enforce obligations to the Collateral; dispose
of Collateral; and take all such other actions as may be lawful in enforcing its
rights hereunder, all without notice, presentment, protest, notice of dishonor,
or other similar procedural requirements.  Maker acknowledges and
agrees that Holder has given value for this security interest.  Maker
agrees to take such further action and execute and deliver such further
documents as may be reasonable to confirm and perfect the security interest
granted hereby, all at Holder’s expense for its out-of-pocket expenses, but
without compensation to Maker.

     

    2. Prepayment.  This
Note shall be prepayable at any time in whole or in part without
penalty.

     

    3. Default.

     

    3.1 Events of
Default.  Each of the following events shall be an “Event of
Default” hereunder:

     

    (a) Default in
the payment of any part of the principal amount of  this Note as and
when due under the Agreement;

     

    (b) If a
petition in involuntary bankruptcy is filed against the Maker under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation under the law of any jurisdiction, whether now or
hereafter in effect, and is not stayed or dismissed within sixty (60) days after
such filing;

     

    (c) Maker
shall make an assignment for the benefit of creditors, or shall file a voluntary
petition in bankruptcy, or shall be adjudicated as bankrupt or insolvent, or
shall file any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation; or

     

    (d) Maker
shall seek or consent to or acquiesce in the appointment of any trustee,
receiver or liquidator of the Maker or of all or any substantial part of the
properties of the Maker, or commence voluntary or involuntary dissolution
proceedings.

     

    
      
        
        

      

      
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    3.2 Remedies on Default,
etc.

     

    (a) If an
Event of Default occurs and is continuing after notice from the Holder to the
Maker thereof and the expiration of a 10 calendar day period to cure, the Holder
may declare all amounts due under this Note immediately due and
payable.

     

    (b) In the
event of a default under this Note, the Maker shall pay to the Holder thereof
such additional amounts as shall be sufficient to cover the costs and expenses
of collection, including, without limitation, reasonable attorneys’ and other
expert witnesses fees, expenses and disbursements.

     

    4. Transfer, Exchange and
Replacement.  If this Note is surrendered for transfer the
Maker shall execute and deliver, in the name of the designated transferee or
transferees, one or more new Notes.  At the time the Note is presented
or surrendered for transfer it shall be duly endorsed, or be accompanied by a
written instrument of transfer in form reasonably satisfactory to the Maker,
duly executed by the Holder thereof or his attorney duly authorized in
writing.  If the Note is mutilated, but is still legible, and is
surrendered to the Maker, the Maker shall execute and deliver in exchange
therefore a new Note.  If there shall be delivered to the
Maker:  (i) evidence to its satisfaction of the destruction, loss
or theft of the Note; and (ii) such security or indemnity as may be required by
the Maker to save the Maker and its agents harmless, then, in the absence of
notice to the Maker that the Note has been acquired by a bona fide purchaser,
the Maker shall execute and deliver, in lieu of any such destroyed, lost or
stolen Note, a new Note.  In the event such mutilated, destroyed, lost
or stolen Note has become or is about to become due and payable, the Maker in
its discretion may, instead of issuing a new Note, pay and retire such
Note.

     

    5. Setoff.

     

    5.1 Notwithstanding
anything to the contrary in this Note or in any other document, in addition to
any rights of setoff or other rights that the Company may have at common law or
otherwise, the Company shall have the right to withhold and deduct any sum that
may be owed or payable to the Company (or any of its affiliates) under the
Purchase Agreement (including pursuant to Section 4.1(b) of the Purchase
Agreement) or any of the Transactional Agreements against any sum that may be
owed or payable to the Holder under this Note.  The withholding and
deduction of any sum finally determined to be owing or payable to Holder shall
operate for all purposes as a complete discharge (to the extent of such sum) of
the obligation to pay the amount from which such sum was withheld and
deducted.

     

    5.2 In
addition to the Company’s rights under Section 5.1 of this Note, if the Company
delivers a Claim Notice to the Holder in accordance with Section 4.1(d)(ii) of
the Purchase Agreement, the Company may withhold and deduct the Claimed Amount
(as such term is defined in the Purchase Agreement) against any sum that may be
owed or payable to the Holder under this Note until the Company’s claim as
described in the Claim Notice is finally resolved.

     

    
      
        
        

      

      
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    5.3 It is
hereby agreed that if the Company exercises its right to withhold, deduct or set
off any amount pursuant to Section 5.1 or Section 5.2 hereof, such withheld,
deducted or set-off amount will be reduced from the amount otherwise then due
under this Note.

     

    6. Interest.  No
part of the Note shall bear or accrue any interest; provided, however, that if
an Event of Default has occurred the amount that is due (the “Default Amount”)
shall bear interest at the rate of 10% per annum until such Default Amount has
been paid.  Such interest shall be paid quarterly by Maker, within
fifteen days after the close of each calendar quarter.

     

    7. Miscellaneous.

     

    7.1 Assignment.  The
Holder may not assign (whether by operation of law or otherwise) this Note or
any of its rights hereunder without the prior written consent of the Company,
except that that the Holder may assign this Note without such consent to its
direct or indirect successor in interest by way of merger, acquisition or sale
of all or substantially all of its assets.

     

    7.2 Amendment.  The
provisions of this Note may be amended or modified only with the written consent
of the Maker and the Holder.

     

    7.3 Headings.  The
titles and subtitles used in this Note are for convenience only and are not to
be used in construing or interpreting this Note.

     

    7.4 Governing
Law.  This Note shall be governed by the internal laws of the
State of California without regard to choice of law rules.

     

    7.5 No Rules of
Construction.  The parties intend that no rules of construction
be employed in the interpretation hereof and none shall be so employed or
asserted.  For all purposes the parties hereto be treated as joint
authors hereof.

     

    7.6 Venue.  Each
of the parties consents to the jurisdiction of the state or federal courts
having subject matter jurisdiction located in the county of Santa Clara in the
state of California in connection with any dispute arising under or concerning
this Agreement and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions.

    


    7.7 Attorney’s
Fees.  In the event of any dispute concerning this Note or the
asserted breach hereof, the prevailing party will be entitled to attorneys’ and
other professionals’ fees in addition to costs.

     

    
      
        
        

      

      
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    IN WITNESS WHEREOF, the
Company has caused this instrument to be duly executed by an officer thereunto
duly authorized.

     

    
      	 	Four
      Js Development Tools Inc.,
	 	a
      Washington corporation
	 	 	 
	 	 	 
	 	By: 	        
      /s/
	 	 	 
	 	Name:	 
	 	 	 
	 	Title: